Friday, August 23, 2002

It's not a great time to be a former executive of Enron. Even George
Bush's FERC has conceded at this point that your
company seems to have gamed the California energy markets. One of
your colleagues, Michael Kopper, has just confessed
to being the personal beneficiary of over $10 million in fraud. The SEC has frozen
the bank accounts of your former CFO and many of his friends and
family, based largely on the song of the stool pigeon. And just
today, another former colleague was arrested
in Britain on charges involving a $1.5 million bribe.

And so these poor folks (remember Linda Lay's thrift shop?) pan
their river of woe for a sliver of hope. Jeff Skilling is now reportedly
haunting tony Houston bars, drowning his sorrows in white wine and
gin, asking anyone who will listen, "Do you believe me? Do you
believe what I've said about Enron?" What he really needs is a way to
exploit emerging technologies to energize and streamline his search.
For the people he seeks are right out here on the Internet, starting
with the Pharoah of Denial himself, Robert Musil.

For as soon as reports of Kopper's plea hit the wires, Musil hit
the net, breathlessly talking
down the news. Perhaps the prosecutors were not demanding Kopper's
cooperation, but just giving him a plea bargain out of the goodness of
their hearts?

According to Associated Press, "As part of the plea
agreement, Kopper has agreed to cooperate with investigators, a
potential watershed event in the investigation since he has knowledge
of Enron's innermost workings and financial dealings." But another
Associated Report says it is not clear whether he has agreed to
cooperate.

In fact, Kopper will be cooperating so closely with the prosecutors
from here forward that, in an unusual move, he's ceded
the right to have his own lawyer present at their meetings. (But
then again, as one Houston lawyer ruefully notes, he no longer has the
money he'd need to pay his lawyers anyway).

But that's not the important thing here. Here's the important thing:

Of course, the important thing here is whether these
charges of crimes against Enron can be leverged though
witness cooperation or otherwise into successful charges of crimes
by Enron or its officers against the investing
public.

What a precious distinction. Never mind that Kopper was
an officer of Enron. Consider the role of the "investing public",
i.e. the shareholders: not victims, but merely bemused observers as
the corrupt machinations of Enron executives sent the company, and
their retirement savings with it, down the toilet.

It is also interesting that Mr. Kopper is not
pleading guilty to accounting, securities or bank fraud, which are the
principle allegations against Enron and its operatives. But
that may just be part of his deal with the prosecutors.

Never mind that the government's theory of the case, which Kopper
must agree to entirely as part of his guilty plea (viz. Zac
Moussaoui's recent lessons at the Leonie Brinkema school of law) is
that the SPE's which Kopper looted were set up in the first place to
cook Enron's books.

And beyond that, never mind that up until Kopper's plea, the
"important thing" regarding Enron on Musil's blog was the lack of
indictments, which supposedly indicated that the feds had no evidence
of any crime. In fact, it's now pretty clear, they were playing off
several Enron officers against each other, looking for the best plea
deal. (There were reports of discussions with Fastow, Ben Glisan, and
others). And they got a doozy --- the best hope for folks like ex-CFO
Fastow was that their accounting structures were so complicated that a
discussion of their intricacies would put a jury to sleep. But
Kopper's testimony about easily-understood matters such as
"kickbacks" and "bribes" will more than likely keep them awake long
enough to vote "guilty".

The only thing we haven't seen yet is direct evidence of
culpability by members of the board, particularly Ken Lay himself ---
a matter of some political import. Remember, Dubya relied so closely
on his friend "Kenny-boy" in the formulation of energy policy that
Lay, not a formal member of the government, pretty nearly had
hire-and-fire authority over the membership of the Federal Energy
Regulatory Commission --- the government body tasked with regulating
Enron. So it certainly makes a difference whether Ken Lay was a fool
or a crook. But the choices now come down to that, and neither
reflects well on Dubya's judgment.